Czech Republic
Market Overview
Bord Bia, Frankfurt
November 27th 2008
Market Overview
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Population: 10.3 million
The main cities are Prague, capital (1,181,600),
Brno (366,800), Ostrava (310,100), Plzen
(162,800) and Olomouc (100,400) (IGD, 2007).
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Languages: Czech (Official), English, German
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Currency: Czech Koruna
€1 = 25 CZK (ECB, October 2008)
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Joined the EU in May 2004
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One of the lead economies in Central & Eastern
Europe (GDP real growth 6.1% in 2006 versus
3.9% in Hungary ) (IGD, 2007)
Source: IGD, 2007
Market Overview
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Great wealth divide between Czech Republic and Western Europe e.g.
average income of a chef in Prague €8,591 versus Dublin €41,019 and
Frankfurt €32,307¹
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GDP Growth: 4.9% 2007 and there has been stable growth in recent
years (IGD, 2008)
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Inflation rate: 2.4% (2007) (IGD, 2008)
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Unemployment: 9.1% (2007) (IGD, 2008)
¹source: Foodservice Europe & Middle East 4/07 pg. 6
Economy
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VAT on goods and services: 19%
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VAT on Food (except alcohol): 5%
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Global Exports:€75.6 billion (2006)
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Imports: €73.9 billion (2006)
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Main import partners: Germany (26%), Slovakia (11%), Poland (11%)
and Austria (5%)
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Export Markets: (food manufacturing) Slovakia (24%) Germany (18%)
Poland (10%) and Austria (5%)
Irish Exports
Czech Republic
66.2%
Food
Beverages and Tobacco
Crude Materials
Mineral Fuels
Chemicals
Manufactured Goods
1.4%
13.2%
10.6%
2.1%
0.2%
Source: CSO Trade Statistics 2008
Machinery
Miscellaneous
Commodities
0.1%
5.4%
0.8%
Irish Food
Export Performance
Food exports from Ireland to
Czech Republic 2007
Total Value of
Exports
€24 million
Other *
1%
Sugars
4%
Miscellaneous edible
45%
Vegetables and Fruit
1%
Fish
5%
Dairy
1%
* includes coffee, tea
and spices, and feeding
stuff for animals,
Source: CSO Food and Drink Statistics 2007
Beverages
13%
Meat
30%
Live Animals
0%
Key Consumer Trends
in the Market
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Retail Sector is showing solid growth.
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Per capita spending particularly high in cities especially Prague.
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Grocery sales account for approximately 41% of the Total Retail Market.
2006
(€)
2007
(€)
2008 (e)
(€)
Total Retail Market (billion)
26.34
29.34
31.91
Grocery Retail Market (billion)
11.2
11.98
12.85
Grocery Retail Spend/Capita
1,095
1,171
1,256
Source: IGD, Retail Analysis, Country Profile Czech Republic, 2007
Retail Grocery Market
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Market value: €11.98 billion (2007)
– No. 5 in the Top 10 Eastern European Markets in terms of turnover.
No. 44 in the Top Global Markets (IGD,2007).
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Increasing per capita spend €1,171 (2007), €1,256 (2008(e))
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Hypermarkets are the leading format - accounts for 32% of value of
grocery retail.
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Lidl & Schwarz Group operating discounters (Lidl) and Hypermarkets
(Kaufland) is the top retailer in Czech Republic and accounts for 12% of
grocery retail market share (IGD, 2007).
Retail Grocery Market
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Discounters: huge growth sector.
– Dominated by Penny (Rewe Group); €524 million in sales (2006)
– Plus (Tengelmann); €437 million sales (2006)
– Lidl (Lidl & Schwarz Group); €417 million sales (2006) (IGD, 2007).
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Cash & Carry: Market is saturated. Dominated by German Metro Group
who operate under the name Makro - sales up 7.3% in last 3 years (IGD,
2007).
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COOP SCMSD is largest domestic player and dominates convenience
market with over 2,000 stores in smaller towns. Has begun to diversify
into larger formats and discount stores (IGD, 2007).
Retail Market Share 2007
Spar
International,
2.82
Delhaize, 1.68
Metro, 3.1
Globus, 4.26
Tengelmann,
6.05
Schwarz
Group, 21.7
Coop Jednota,
7.24
Rewe, 10.76
Tesco, 7.93
Ahold, 9.65
Source: IGD Country Presentations Czech Republic
Retail Market Structure
Top 10 (2007)
Retailer
Total Net
Sales
(€m)
Grocery
Net Sales
(€m)
% Change
Grocery Sales
2006 v 2005
Grocery Retail
Market Share*
(%)
No. of
Stores
Sales Area
(sqm)
Lidl & Schwarz
1,390
1,390
+16.8%
12.41%
218
387,600
Ahold
1,278
1,278
+12.0%
11.41%
297
423,000
Metro
1,193
1,193
+8.4%
-
12
93,000
Tesco
1,177
1,177
+77.0%
10.51%
84
381,460
Coop SCMSD*
883
883
+1.3%
7.88%
3,022
1,114,000
Rewe
844
844
+18.5%
7.54%
254
332,250
Globus
593
593
+9.0%
5.29%
12
115,755
Tengelmann
634
437
+3.3%
3.90%
125
231,937
Spar International
420
420
1.9%
3.75%
140
127,140
Delhaize
274
274
+0.7%
2.45%
97
90,000
Source: IGD Analysis, Country Presentation, Czech Republic 2007
Private Label
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Private Label increased share from 16.7% in 2005 to 17.1% in 2006.
Private Label Share 2006 %
80
70
60
74.5
50
40
30
27.8
20
22.5
17
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Source: IGD Analysis Country Presentation
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Foodservice Trends
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Consumer foodservice in Czech is saturated in terms of numbers of
outlets, but not in value sales which are currently growing.
Disposable income is increasing, but the cost of living is also rising
which has had a slowing affect on the growth of sales in foodservice.
Specialist coffee shops are the smallest but also the fastest growing in
the café/bars sub sector in 2006. These outlets tend to offer light dishes
and lunch menus and an increase in emphasis on healthy foods.
Competition in the market is increasing with the expansion of local and
international chains. Strongest competition is visible in the fast food
sector with both McDonald’s and KFC present.
The majority of consumer foodservice operators were independent in
2006 but chains are developing gradually with franchises driving growth
especially as local operators often lack significant investment capital.
Foodservice
2005
(€)
2006
(€)
2007
(€)
Total Food Spending, net (millions)
14,176
15,733
17,161
Foodservice Sales net (millions)
2,287
2,579
2,865
223
252
280
Foodservice Sales net/capita
Source: Planet Retail Grocery Retailing in Czech Republic 2007
Rate used equals the average Euro Dollar Exchange rate for that particular year.
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There were nearly 600 million foodservice sales transactions in 2006.
26,000 outlets were operated in consumer foodservice across all categories
and of them only 726 outlets were part of a chain - or 2.7%.
It is estimated that by 2011 there will be 104 billion CK worth of sales and
using the current conversion rate of €1=25CK this is approximately worth
€4.17 billion.
Source: Euromonitor Consumer Foodservice in Czech Republic 2007
Chained Consumer
Foodservice Brands
by outlet and value share
80
45
70
40
35
60
50
30
No. of Outlets
25
% Share
40
20
30
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Compiled from Euromonitor data, 2007.
Foodservice
Establishments
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Café Emporio
– Czech Café Franchise with cafes located all over the country
Café Heaven
– British owned franchise
– 18 outlets throughout Czech Republic
Paneria
– Owned by the Czech Eureca Shops s.r.o
– Bakery Franchise selling baguettes, salads, panini's and rolls
– Shops in Prague, Brno, Znojmo, Cheb
Mondo Pizza
– Pizza chain found in Czech Republic in 1998
Portrefena Husa
– Pub chain found throughout Czech Republic
Reasons for targeting Czech Republic
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High concentration of organised trade, predominantly Western owned
relative to other Eastern European countries
Consumers becoming more quality conscious and not just price driven
Strong presence of Irish Meat, Dairy and Spirits products on the market
Tourist destination with demand for high quality products
Barriers/challenges in supplying
Czech market
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Major logistic infrastructure based only around main cities.
High annual consumption of pork in the market (45kg per capita)
Market now more established and more difficult to break in to than 5-10
years ago.
Strong supply of locally sourced agriculture products
Not due to join Eurozone until 2010
Bord Bia services 2009
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Bord Bia market mentor (Mr. Kieran Fahy) available for Eastern Europe market and
trade related queries:
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Services include: Itinerary Development, Category Analysis, Media review and
translation services, Product Price auditing and tracking, Product retrieval, Buyer
networking, Distributor searches
Kieran Fahy
Sarospatak ut 32
1125 Budapest
Hungary
Tel: +36 706 144871
Email: Kieran.fahy@freemail.hu
Also: Liam MacHale
Bord Bia
Wöhler Str. 3-5
60323 Frankfurt, Germany
Tel +49 69 710 423 255
Email: liam.machale@bordbia.ie